Axel Bugge: Time is on Socrates' side as opposition seeks a new leader

HARASSED by the opposition and under investor pressure to repair the economy, troubles are piling up for Portugal's minority Socialist government, but bets against prime minister Jose Socrates may be premature.

Mr Socrates' minority in parliament has left him in the uneasy position of relying on the Social Democrats to pass the 2010 budget just as the main opposition party relentlessly dogs him over allegations that he attempted to manipulate the media.

The balancing act forced on Mr Socrates could not have come at a worse time, as Portugal attempts to cut its budget deficit to prove that it is not the next weak link in the eurozone after crisis-hit Greece.

Bond investors are watching and civil servants plan a strike on 4 March, fearing the austerity to come.

The government has promised spending cuts, which it will outline in a plan to be presented to Brussels by the end of the month, to bring the budget deficit to below 3 per cent of gross domestic product by 2013, from 8.3 per cent this year.

But, politically at least, time is on Mr Socrates' side. The Social Democrats (PSD) can make as much political noise as they like, but right now they are unable to govern as they find a new leader after losing last year's election, analysts say.

"The PSD is cleaning up its act, they are in no condition to govern," said political scientist Rui Oliveira Costa, who heads Eurosondagem pollsters.

"The opposition is taking advantage of it all to wear down the government, that is inevitable, it will continue. But a motion of no confidence is out of the question," he said.

"Socrates can deal with pressure well."

Making the point, a number of leading Socialists have taunted the PSD to launch a motion of no confidence in recent days.

No such motion has materialised – but if all opposition parties united the government would lose such a vote and fall.

Parliament launched hearings this week into allegations that the government had tried to interfere in the media sector, including by using Portugal Telecom, where the state has an indirect stake, to buy into a television station.

A state-appointed member of Portugal Telecom quit on Wednesday.

Mr Socrates, a marathon runner, denied the attacks on Thursday, calling them politically-motivated lies and an attempt to undermine his rule.

He has also called meetings of Socialist leaders this week to rally the troops in a show of unity.

Mr Socrates knows that he has other advantages as well – for now opinion polls show his party in the lead with about 40 per cent support against just under 30 per cent for the PSD.

Political analyst Marina Costa Lobo said the economic trouble prompted by the Greek debt crisis could in itself help Socrates, as the PSD may want to wait to see whether the economy rebounds or not.

If there is no strong rebound after the worst recession in decades last year, the PSD may calculate that it is a better strategy to wait before forcing an election so that the Socialists are left dealing with the downturn and not them.

"It is difficult to make any political forecast because the economic situation could worsen," Costa Lobo said, adding though that minority governments have no history of lasting in Portugal.

Also complicating the picture is the role of president Anibal Cavaco Silva, who is the one who has the power to dissolve parliament and call elections under the constitution.

But that power is limited to certain time frames after and before elections – only in early April can he now exercise that power because Portugal held a general election in September.

Cavaco Silva, a former PSD leader, has so far urged cooperation between government and the opposition.

By then, the PSD should have a new leader and the 2010 budget should have been passed by parliament – failure to pass it would almost certainly lead to a collapse of the government.

In the meantime, debt markets could come under pressure again – especially if there is a renewed knock-on from concerns over another southern euro zone member, especially Greece.

And the situation has begun to take a toll on Socrates.

"I think these are very serious problems (over press freedom] and I think they could bring the prime minister down," said Jose Marinho, a painter working in central Lisbon.

Fernando Madrinha, a columnist in weekly Expresso, fears that a stalemate will emerge.

"What we are facing is a prime minister who is increasingly weak and an opposition that lacks the courage to bring him down," he wrote.

• Axel Bugge is a correspondent with the Reuters news agency